Tax Administration Laws Amendment Bill, 2012 [B35 ... - Juta - Law

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amendment aims to introduce the same criminal offence and penalty on suchperson as is the case with an approved public benefit organisation, if thisperson intentionally fails to comply with any provision of this section or of theconstitution, or other written instrument under which such approvedassociation is established.2.11 Income Tax Act, 1962: Insertion of Part IA of Chapter IIThe current system of withholding taxes relating to dividend, interest androyalties differ as to rates, timing, refunds and other procedures. While someof these differences can be justified, many of these differences arose simplydue to the dates in which these provisions were enacted. The amendmentcoordinates and streamlines the rates, liability, timing and procedurewithholding taxes in the case of dividends tax, royalties and interest. See noteson ‘‘Rationalisation of withholding taxes on payments to foreign persons’’ inthe Explanatory Memorandum to the Taxation Laws Amendment Bill, 2012.2.12 Income Tax Act, 1962: Insertion of Part IVA of Chapter IIThe current system of withholding taxes relating to dividend, interest androyalties differ as to rates, timing, refunds and other procedures. While someof these differences can be justified, many of these differences arose simplydue to the dates in which these provisions were enacted. The amendmentcoordinates and streamlines the rates, liability, timing and procedurewithholding taxes in the case of dividends tax, royalties and interest. Seenotes on ‘‘Rationalisation of withholding taxes on payments to foreignpersons’’ in the Explanatory Memorandum to the Taxation Laws AmendmentBill, 2012.2.13 Income Tax Act, 1962: Amendment of section 61The proposed amendment is of a textual nature consequential to theamendment of the definition of ‘representative taxpayer’ in paragraph 2.4above.2.14 Income Tax Act, 1962: Amendment of section 64KThe submission of returns is linked to payments of dividends tax to theCommissioner only. Where no payment of tax is required, but a payment of adividend occurred, there is no requirement to submit a return.The above can be illustrated by the following examples:Example 1:A listed company declares and pays a dividend, and transfers the administrationto a ‘‘regulated intermediary’’ and hence the liability to withholddividends tax is also transferred to the latter. The company has no obligationto submit a return to this effect to the Commissioner.Example 2:32A regulated intermediary facilitates the payment of a dividend on behalf of alisted company, and withholds the correct amount due, but due to claims forrefunds on earlier dividends facilitated on behalf of other companies (seesection 64K(1)(c)), there is nothing left and it need not make payment to theCommissioner, and hence need not submit a return to this effect to theCommissioner.As can be seen from the above examples it will be impossible to properlyadminister the tax as a complete picture of the dividend flows through thechain (from the originating company through various levels of regulatedintermediaries to the eventual beneficial owner) will not be available.
The proposed amendment links the submission of a return to the payment ofa dividend instead of to the payment of tax, by amending section 64K(1)(d)accordingly.2.15 Income Tax Act, 1962: Amendment of section 64LParagraph (a):Section 64L (refunds by companies) make provision for refunds only where alate declaration is submitted (i.e. no withholding or reduced rate withholding).Thus, if a rebate is not allowed for some reason, the full dividends tax iswithheld and proof is submitted later that a qualifying foreign tax waswithheld and should have reduced the dividend tax, the rebate cannot beclaimed in terms of section 64L. The proposed amendments provide that a laterebate can be claimed if claimed within three years from the payment of therelevant dividend.Paragraph (b):In order for a company or regulated intermediary to withhold either nothing orat a reduced rate, the beneficial owner has to submit both a declaration and awritten undertaking. If he fails to do so at the required time and more iswithheld he only needs to submit the declaration in order to get a refund (seesection 64L(1)(c)). In other words less strict requirements apply when thetaxpayer is delinquent than when the taxpayer is compliant.However, if SARS requires the undertaking in the normal course of businessSARS would also require it when the taxpayer is in default (especially sinceit could lead to a recovery claim from SARS under a section 64L scenario).It is proposed that section 64L(1)(c) be amended to require submission of boththe declaration and the written undertaking.Paragraph (c):The proposed amendments are consequential to the insertion of the newsubsection (1A).2.16 Income Tax Act, 1962: Amendment of section 64MParagraph (a):Section 64M (refunds by regulated intermediaries) make provision forrefunds only where a late declaration is submitted (i.e. no withholding orreduced rate withholding). Thus, if a rebate is not allowed for some reason, thefull dividends tax is withheld and proof is submitted later that a qualifyingforeign tax was withheld and should have reduced the dividend tax, the rebatecannot be claimed in terms of section 64M. The proposed amendmentsprovide that a late rebate can be claimed if claimed within three years from thepayment of the relevant dividend.Paragraph (b):33In order for a regulated intermediary to withhold either nothing or at a reducedrate, the beneficial owner has to submit both a declaration and a writtenundertaking. If he fails to do so at the required time and more is withheldhe only needs to submit the declaration in order to get a refund (seesection 64M(1)(c)). In other words less strict requirements apply when thetaxpayer is delinquent than when the taxpayer is compliant.However, if SARS requires the undertaking in the normal course of businessSARS would also require it when the taxpayer is in default (especially sinceit could lead to a recovery claim from SARS under a section 64M scenario).
Page 1 and 2: REPUBLIC OF SOUTH AFRICATAX ADMINIS
Page 3 and 4: (2) Any annex or amendment to such
Page 5 and 6: 5Amendment of section 30 of Act 58
Page 7 and 8: Insertion of sections 49E, 49F and
Page 9: 9(4) No amount may be recovered in
Page 12 and 13: (c)(d)12income equal to 90 per cent
Page 16 and 17: 16Repeal of section 1 of Act 18 of
Page 18 and 19: Amendment of section 27 of Act 28 o
Page 24 and 25: (iii)24confirmed that the taxpayer
Page 26 and 27: Insertion of section 240A in Act 28
Page 28 and 29: Substitution of section 256 of Act
Page 30 and 31: MEMORANDUM ON THE OBJECTS OF THETAX
Page 34 and 35: It is proposed that section 64M(1)(
Page 36 and 37: Act, and must, therefore, be impose
Page 38 and 39: • The amounts of the royalty impo
Page 40 and 41: 2.44 Tax Administration Act, 2011:
Page 42 and 43: 422.60 Tax Administration Act, 2011
Page 44 and 45: 2.78 Tax Administration Act, 2011:
Page 46: 2.89 Tax Administration Act, 2011:

Tax Administration Laws Amendment Bill, 2012 [B35 ... - Juta - Law

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